Decline in charter rates doubles in pace
The decline in charter rates for multipurpose vessels is accelerating. The average charter rate for a 12,500 dwt multipurpose vessel currently stands at USD 6,863, 5% lower than in March 2020.
Charter rates are falling as a result of the coronavirus which has led to decreased transport demand and a multitude of operational difficulties such as quarantine restrictions and prohibited crew changes.
The decline was already visible in March but in comparison, the decline over the last 30 days is bigger than it was between March and February.
In March the average charter day rate in Toepfer’s Multipurpose Shipping Index amounted to USD 7,221, 2.6% below the average rate of February. Since then, the average charter has dropped by another 5% meaning the decline has doubled in pace.
There is some reason for hope as the China Manufacturing Purchasing Managers Index (PMI) has actually exceeded the expectations for March 2020.
The PMI provides an early indication each month of economic activities in the Chinese manufacturing sector and is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. According to Statista, a value above 50 indicates a positive development while a value below 50 means a negative development. An index value of exactly 50 means there is ‘no change’.
After a worse than expected crash in February, Chinese manufacturers also bounced back better than expected. At the end of March, the index reached 52 points, 7 more than the forecasted 45 points. This means the manufacturing industry is showing positive developments. The forecast for April is also set at 45 points.